1. Field of the Invention
The present invention generally relates to a method for selecting prospective customers from a large pool of candidates. More particularly, this invention pertains to a computer implemented process that applies data mining techniques to databases containing data records representing customer and overall market populations for the purpose of selecting market segments and prospective customers for targeted marketing.
2. Background Description
An important aspect of marketing research is understanding demographic characteristics of those who are buying a product of interest. Developing such product-market insight allows for the design for new products, the identification of cross selling opportunities, and more importantly, the identification of prospective new customers. In the latter case, it is desirable to measure a subject's "propensity to buy" a particular product given his demographic characteristics. Developing such a measure using statistical methods requires training data which includes data for those who bought the product as well as for those who did not when given an opportunity to do so. Such buyer versus non-buyer data is either nonexistent or expensive to collect and typically requires conducting well-designed experimental marketing campaigns.
On the other hand, many companies have extensive collections of data for their customer base. For example, insurance companies keep records of each of their policy holders, including a customer's business transactions as well as demographic characteristics that are relevant to the policy. Also, there exist companies that provide general marketing data, such as demographic data for the majority of United States households.
To know their customers better, it is common for companies to have their customer data enriched with the corresponding household demographic data from external data suppliers. However, the use of such enriched data is limited, often confined to creating statistical models of customer behavior such as purchase amount and customer loyalty. Such models are of little use for identifying prospective new customers for the purpose of expanding the customer base.